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Arbitration panel orders Tiffany to pay Swatch damages

BY CSA STAFF

A Dutch arbitration panel has ordered Tiffany & Co. to pay Swatch damages of about $449.5 million plus interest in a breach of contract case dating back to 2011. The dispute stems from Swatch’s claim that Tiffany failed to honor its obligation to develop and sell Swatch watches under the Tiffany name and split the profits.

The amount is 8.8% of the total damages sought by Swatch. Tiffany will also have to pay about $8.8 million in fees, expenses and other arbitration costs. One arbitrator on the three-arbitrator panel did not rule in favor of Swatch.

“We were shocked and extremely disappointed with the decision of the majority of the arbitral panel,” said Michael J. Kowalski, chairman and CEO of Tiffany. “We firmly believe the panel’s ruling is not supported by the facts of this case or the various agreements between the Swatch parties and the Tiffany parties. While we are reviewing our options with our legal counsel, I want to assure you that we do have sufficient financial resources to pay the full amount. We will record a charge for the after-tax impact of the award, which we estimate to be approximately $295 – 305 million, in the fourth quarter. However, we do not believe that the award will impact our ability to realize our existing business plans in the short or long term, and we are extremely pleased to be moving forward with our plans to design, produce, market and distribute our own Tiffany & Co. brand watches.”

Tiffany intends to fund any amounts to be paid from immediately available cash on hand and funds available under its existing debt facilities. The company has lowered its earnings per share guidance for fiscal 2014 to $2.30-$2.35 from $3.65-$3.75.

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What grocers going digital need to know

BY CSA STAFF

E-commerce has redefined the retail shopping experience and shaped the fate of retailers in many sectors. Grocers have been the exception thus far, but that is about to change in a major way.

There are many challenges for grocery retailers, including heavy upfront investments, logistical challenges associated with delivery of perishable items and the inherently low margins associated with selling food. However, we are beginning to see some sustainable models in online grocery. As shoppers become more comfortable buying more categories online, traditional grocery items are being added to the list. Just recently, Amazon.com announced its expansion of AmazonFresh into new markets. Today online grocery is growing at nearly twice the rate of any other industry.

Now is the time for many grocery retailers to determine how they will position themselves in this new digital world. There is no one strategy that is right for every retailer, but there are five key principles to consider:

1. Understand the shopper
The shopper’s path to purchase for grocery has become more complex. In the grocery world, the number of influencers has increased dramatically. In addition to cookbooks and weekly circulars, there are now Facebook postings, online coupons, YouTube videos, Pinterest recipe sites and cooking blogs. Often a shopper’s moment of truth occurs long before they head out to the store — if they choose to go out at all — and product consideration, evaluation and even purchasing is increasingly happening outside of the physical store space.

It’s true you can’t go anywhere these days without hearing about a new digital technology or mobile app that will change the future of retail. However, retailers that focus on the technology alone will surely fail. Competing successfully in this new e-commerce world depends on one thing: understanding the shopper.

Grocery retailers that win in this digital world are those that understand their shoppers’ basic needs and deliver on their terms.

Many brands and retailers have devoted resources and effort to interrupting the shopper’s path to purchase with Facebook brand pages or banner ads, but these techniques have not necessarily driven sales to specific grocery retailers. After all, the pre-shop for grocery is not the same as it is for a new television, and cannot be treated in the same way. While the number of digital touch points and influences has grown exponentially, the basics haven’t changed. Shoppers fundamentally want convenience, ease of shopping and value. Retailers that can deliver on all three through the right digital and physical combination will win.

Shoppers’ “digital lives” are not separate from their physical lives. The time shoppers spend online and on mobile is closely linked with their physical world. Linking digital and physical shopping experiences offers more substantial opportunities for innovation and growth.

Understanding the shopper’s paths to purchase will enable retailers to see where digital strategies can support their needs. For example, banks have been using digital technologies, such as Web- and mobile-based apps and ATMs, in high-traffic areas to expand their brick-and-mortar networks for years. Retailers can do the same. Sainsbury, a U.K.-based retailer, piloted a Mobile Scan & Go service. With it, shoppers simply download an app to their smartphone, scan their own merchandise as they shop and then check out instantly without even unloading their carts.

2. Re-imagine the notion of service
E-commerce is more than just a delivery mechanism, but an opportunity to differentiate one’s service in new ways. Grocers should create services that better match up with shopper preferences and expectations. Another opportunity is to integrate a world without aisles and shelves where data can inform more value-added interactions and help grocers gain true advantage. Some service-oriented solutions that grocery retailers are delivering today via digital include:

  • A “remember my list” feature, which Peapod rolled out, that allows shoppers to choose products from a list of prior purchases to make it easy to find the items they buy most.
  • Three meals’ worth of groceries that include ingredients perfectly portioned for their corresponding recipes delivered in an insulated box, curated by BlueApron and designed to precisely match shopper purchases and needs.


3. Create a compelling in-store experience

Most brick-and-mortar retailing offers advantages that online retailing simply can’t match. Grocery stores can offer real-time conveniences, yet for many shoppers, a trip to the grocer is a chore. Consider how you can create a compelling in-store environment that complements a digital presence and adds more “wow” to the shoppers’ experience.

Take advantage of kiosks, QR codes and mobile apps to enrich the shopping experience with more options, more information and more purchasing power.

4. Expand your offering with a well-curated, endless aisle
Adding a digital shopping cart and fulfillment site can help grocery retailers expand their product selection, ensure availability and overcome shelf-space limitations, but there’s another way to approach the use of this technology. Many retailers have also added in-store kiosks or computer terminals to provide in-store shoppers with the ability to see and order additional products beyond those on the shelves. By creating this type of “endless aisle,” retailers can stock less inventory in-store (and even reduce store size) while delighting customers.

A well-curated endless aisle helps address shoppers’ needs to find specialty or hard-to-find items. And because the aisle is digital, it can easily be frequently altered to reflect seasons, specials and new additions. The endless aisle can also become a virtual treasure hunt, enabling customers to make new discoveries during their everyday shopping processes.

5. Think of your shopper as a partner
Today’s consumers have more power than ever before. They can access information, compare prices and share opinions with their own personal networks in a matter of seconds. Advances in communication, interactive technologies and data analytics make it easier to create two-way dialogues with shoppers. And shoppers are coming to expect shopping experiences where their opinions, their preferences and their reactions influence retailer decisions.

To help build relationships, look for ways to provide value-added content such as information on recipes, health and ingredients. Make it easier for shoppers to express their opinions on what they like and don’t like about their store experience.


Andres Siefken is recognized as a thought leader in marketing strategy and serves as chief marketing officer at Daymon Worldwide, a global leader in retail private brand building, experiential consumer marketing and innovative retail-driven services. Click here for more information.

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Class-action lawsuits stack up against Target

BY Katherine Boccaccio

Minneapolis — In the wake of Target’s massive data breach first revealed on Thursday, three class-action lawsuits have been filed against the retailer, seeking more than $5 million in damages.

Target confirmed that the data theft involving 40 million credit and debit card holders’ accounts occurred over a 19-day period that stretched from Nov. 27 to Dec. 15, three of Target’s busiest shopping weeks of the year.

Because of the breach, at least 2 million shoppers who used bank debit cards at Target stores during the breach period are facing lower limits on how much cash they can take out of teller machines and spend at stores. The limitations, which are occurring during shoppers’ last-minute holiday purchasing time frames, are causing outrage among affected customers.

"This is the worst possible time something like this could happen," one industry analyst told the Wall Street Journal.

The large-scale security breach occurred at all 1,800 Target retail stores, and goes down as the second biggest of its kind, sitting only behind TJX Cos. March 2007 data breach.

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